What is happening here later today is really a costly side show to the main event, which is that, in the next few months, the Taoiseach's Government will screw down every taxpayer, small business and hard-working family in this country to pay for the wanton waste of his party in government over the past number of years.

What explanation can the Taoiseach give for leading the country to this economic cliff face? What explanation does he have for turning a €6 billion surplus into a €15 billion deficit in the space of two years and for the fact that, on published data, this country is now the only one in Europe in recession?

I do not regard the investments that have been made successively by Governments over the past ten years as wanton waste.

What about the e-voting machines?

Deputies, please. The Taoiseach has only just started. Let him finish.

We now have 2.1 million people working compared to only 1 million before——

A lot of them are losing their jobs now.

——and we have increased the average industrial wage by €14,500——

Allow the Taoiseach to finish, please.

——in that period. Despite increasing the average industrial wage by €14,5000, the fact that we have reduced the tax take on those wages by €400 is an example of our pro-enterprise, pro-jobs and pro-investment policies which were far superior to those of any other member state of the European Union.

Sure, there are no problems at all.

The particular issues affecting us now with regard to the downside risks that have come to pass, such as higher commodity prices and a global financial crisis, probably the worst we have seen since the 1930s, means an open economy such as ours cannot be immune from these developments.

A particular issue on the domestic front also affects our performance, that is the reduction in residential housing output, which has a drag of approximately 4% on growth this year alone. That in itself is a particular reason beyond what one can look to in other countries as being a reason for the present performance of our economy. During that period, this economy also provided itself with the ability to reduce its debt considerably. The National Pensions Reserve Fund represents another 14% of GNP, which is an asset to the country.

While this year and next year we will face into a far more difficult set of circumstances, the purpose of the budget today will be to frame an objective where we seek to restore stability to our public finances and create a pathway back to current budget balance in time, recognising — I would not regard this as wanton waste — that we have had an unprecedented capital investment programme, practically all provided for from cash from surpluses in the past.

We are talking about continuing with a very significant public capital programme for which we will borrow. The return on the investment we saw from the last national development plan was in the region of 18%. Borrowing for capital purposes is absolutely above board as far as I am concerned, despite the fact that in previous years we funded the investment from surpluses.

Where we have an issue is with regard to the current budget deficit and the need to stabilise that situation and work back without cutting back unnecessarily on public services. We must provide a balance in our budgetary strategy that recognises social welfare provision of approximately one third of current spending, public sector pay and a pensions bill of approximately one third of spending and the rest being spent on current day-to-day spending and the delivery of services in all other areas. To find a balance will require further reforms and policy changes, the beginnings of which will be announced today.

With respect to the Taoiseach, the question I asked him was what explanation he has for turning a €6 billion surplus into a €15 billion deficit in two years. What is his explanation for leading this country into recession? As per the published data, we are the only country in Europe now in recession.

There are the little matters of acceptance of responsibility and attachment of blame. The Taoiseach never accepts responsibility for the actions of his Government. He takes the credit but he will not take any blame. The Taoiseach and his Government were responsible for building the largest ever property bubble in this country, the most indebted financial system, the greatest loss in competitiveness and the largest ever deterioration in public finances.

It is not the global financial turmoil that is responsible for the fact that thousands of small businesses and shopkeepers cannot pay their water charges never mind their commercial rates. It is not the global financial position that has caused the overcrowding in Drogheda hospital today. It is not the global financial position that has caused such turmoil in education sectors where children are educated in overcrowded classes. It is not the global financial turmoil that has caused us to have the highest government costs in the eurozone in transport, communications and energy. This all boils down to the Government and its management, or mismanagement, of the economy, with these effects on the people.

The Taoiseach will come to the House with the Minister for Finance, who is misfortunate, as he said, in being in this position at this time, and we are expected, after the softening up process over the past three weeks, to understand that the people's choice was to bring us to this point where in the next couple of hours we will have to listen to what many consider to be a financial Armageddon. In respect of acceptance of responsibility and of some modicum of blame for what has happened here, is the Taoiseach big enough to accept that to put massive current spending programmes on the back of an unsustainable property bubble was a serious mistake? Unfortunately, because of this the people will have to pay for it, left, right and centre, over the next nine months.

Hear, hear.

Unfortunately, the Leader of the Opposition destroys the impact of his questions by his exaggeration. There are problems with the economy with which I will deal. This idea that it was wrong to double pensions for pensioners during the good times——

Hear, hear.

That is hiding behind the pensioners.

——that it is was wrong to have increased the number of nurses, gardaí on the streets and teachers in our schools is not right.

If the Taoiseach cannot acknowledge his mistakes, we are in deeper trouble than we should be.

Those were the right measures. When we did that, we brought forward surpluses even after capital spend.

The Government brought forward cuts in services then.

Tell us about them all.

I do not recall any Member on the Opposition side, certainly not from the Fine Gael Party, who suggested the surpluses were not big enough then——

The Government squandered it all.

——and that we should have spent less. Let us have some consistency and logic to the arguments being made.

The country is in trouble.

The Opposition did nothing.

During that period of what Deputy Enda Kenny calls proliferated spend, we reduced our national debt. The performance of the economy was such that we were able to make up major historic deficits of under-investment, not only in day to day services but also in capital purposes.

The Government cut services.

What about public pay?

Those are the facts. The situation today is different. I accept my responsibilities in respect of everything I have done in public office.

The Taoiseach has taken responsibility for the first time ever.

It is not for the first time ever.

I see it as the first time ever.

I will not have that record misrepresented by Deputy Enda Kenny. He suggests——

——the Government should not have doubled pensions when it could afford to do so.

What about public pay?

What will the Government do now?

Order.

Shouting me down after being heard in silence does not make the Deputy's point.

We are the only country in recession.

Shouting me down when I give the Deputy an answer does not make his point.

The Taoiseach should not try to roar me down. He did it once but he will not do it again.

The Government squandered it all.

Those increases in old age pensions, for example, will be maintained in real terms when the Minister for Finance stands up in the House to deliver the Budget Statement later. When we were in good times, I am proud that my predecessor——

He is proud all right.

——and I gave greater increases beyond inflation and at the same time we are in a position to maintain those achievements and progress. I acknowledge there will also be challenges in other areas. I will not accept that the basic strategy of the Government over the past ten years was a mirage and did not benefit our people. It certainly did.

That mirage is crumbling now just like Fianna Fáil.

If we provide the proper and prudent financial management of the economy, those days can return to Ireland despite Deputy Enda Kenny's exaggerated claims that we have gone down.

This is all bluster.

I will lead a Government that will make the necessary decisions to take into account the new economic situation that has now developed, as it has developed elsewhere.

The only thing is that we now have a €15 billion deficit. We are the only country in recession.

We are the only country in recession.

We will face those challenges with the same capacities as we have faced them in the past.

The fundamentals are wrong.

The Opposition is all over the place. They do not understand anything.

The Taoiseach, when Minister for Finance, destroyed the economy.

Quite the opposite in fact.

Reckless mismanagement.

The Opposition blames us for everything but does not acknowledge that it was we who put the success in place.

What all this amounts to is that the Taoiseach wants to take credit for the good times and no responsibility for the recession. The Taoiseach's and the Government's problem over the past several years is not, as they claim, that they did not see the recession coming, but they would not listen. As recently as July 2007, the Taoiseach's predecessor told a conference in Bundoran that he did not know why people who engaged in cribbing and moaning about the economy did not commit suicide. He described anyone who expressed any criticism of the Government's economic performance as a creeping Jesus. The former Minister for Finance, Charlie McCreevy, described anybody who questioned what the Government was doing with tax breaks for property development and so on as left-wing pinkos. He advised the country to party on. The Government partied on and now there is a hangover. It is payback time, but those who are being asked to pay back are the taxpayers. The reality is that no other country has gone from our budgetary surpluses to the kind of deficits we have currently. The Government, led by the Taoiseach, has walked this country into an economic recession and there is no point in trying to blame it on international circumstances.

We know there are international factors, but the economic policies pursued by the Government contributed to the specific problem we have — particularly the over reliance on residential construction in recent years when everybody could see that it was not sustainable. More and more air was blown into the balloon and eventually it burst, which is why we are where we are today. Instead of the bluster we are getting from the Taoiseach and the kind of political slagging——

Slagging?

We can all engage in that. It would be more becoming of the Taoiseach to take responsibility and offer a little bit of contrition to the people who will have to take the pain this evening.

And humiliation.

I am accused by Deputy Gilmore of political slagging, but I am defending the record of this Government, which has a strong record to defend.

It is indefensible.

That is the first point. The second point is about the idea that I would not listen. When a correction was needed in 2001 and 2002 we were told by the Opposition that we should battle on and not make any adjustments or corrections. The Opposition was wrong on that because the economy bounced back far more quickly. We did not listen either when the Opposition said that not alone were we spending too much, but we were not spending enough in a whole range of areas. The Opposition cannot come in here now and suggest that they had a policy framework to ensure that none of this would ever happen.

What about the decentralisation policy, which is in a shambles?

I am responding, as a matter of fact, to what has consistently been the Opposition's policy position. It has been about the fact that we have not been spending enough, not that we have been spending too much.

Not spending it wisely.

That has been the Opposition's position. The Deputy then went on to make the point about the property situation. I was the Minister who brought in the elimination of the tax breaks over time so that——

The Taoiseach kept postponing it.

——those breaks were not unlimited or available in all respects. I was the Minister who introduced that measure in response to the change that was coming in the property market. The Opposition — before, during and since the last budget debate and certainly in the run up to the 2007 election — was saying that we should cut stamp duty by a greater amount so that we could raise prices. I refused to agree to that and did not accept it as the property policy position. I stood over that decision.

The Taoiseach has forgotten Michael McDowell already.

I accept full responsibility in respect of everything I have done in public life——

For the Cowen slump.

——which has always been motivated by the public interest. Can the Opposition tell me anybody, any finance house, any economic forecaster who did not say——

The ESRI.

Last December, the ESRI suggested the growth in the economy this year would be 2.7%. They were the most pessimistic.

So were they right?

The Central Bank said it would be 3.5%.

But they were wrong.

I brought in a budget that put out a growth profile of 3%, which was the median. So there was nobody, including Deputy Quinn, who suggested — obviously no one could predict — the outcome we have seen during the course of this year as regards the international climate that has developed.

Alan Ahern of NUIG.

Nobody saw it, but that is not to suggest in any way that I avoid my responsibilities — quite the contrary. However, I will not accept the contention from the parties opposite that there were people at the end of last year, coming in to frame a budget, who suggested that we would not have growth rates of at least 2.7% this year.

That is not true.

They will get it right eventually.

That was in the aftermath of the sub-prime issue that arose in the United States the previous August. Let us be fair and honest in getting the facts out on the floor.

The Taoiseach is in denial.

The situation now is that, as a result of the hard landing that has come to the residential property market, it is imposing a fiscal drag of 4% on what would otherwise be a growing economy. We have to deal with that situation now. When people talk about the need for more housing, they have a lot to say about those who are involved in property markets, but that industry employed 250,000 people. It grew from an industry of 120,000 people.

But the fundamentals were wrong.

What we must do now is off-set the reduced activity in residential housing. This Government is bringing forward a substantial public capital programme next year and we will see an increased expenditure in our capital programme, for example, for education, in all of our efforts to find off-sets because of the reduced activity in residential housing, not to the extent that it will compensate adequately for the previous record level of activity because the demand is no longer there for that level of activity, but that level of activity was for many years, as we know, seeking to meet increased demand. Supply could not meet demand for many years and that was the situation that prevailed.

Do the Greens support this?

They are not here.

I do not accept for a moment what Deputy Gilmore suggests, that I should in some way walk away from the achievements of Government in the past or that I should walk away from taking responsibility for the position I now hold, which I gladly take on. I take it on with the same sense of duty as he would if he were in this position.

It is the Government's job to manage what is happening in the economy. We now have a very hard landing. It has not come entirely as a surprise because everybody has known that there was going to be a landing of some kind at some stage. For a number of years economists and commentators have been speculating on the prospect of whether we were going to have a soft landing. It was his Government's job to manage the economic affairs of this country so there would be a soft landing, and he did not do that.

On telling us what we said in 2000-01, I can go back further than that. As far back as the late 1990s, when the property market was taking off, when house prices were shooting up and were moving way beyond the reach of working families to afford, the Labour Party put it to Government that what was happening in housing was not sustainable. We argued, for example, for controls on the price of development land and on building land, all of which the Government rejected. The Government continued to keep the party going, to keep it moving, to keep the speculation in building land, to keep the profiteering in housing, to keep driving house prices beyond what they were worth and what people could afford and, ultimately, it ended up driving residential construction way beyond what was needed or what was sustainable. Two or three years ago, people could see what was happening.

One looks around the country. Was it sustainable to build suburban housing estates around the edges of villages? It clearly was not. Was it sustainable to build apartment blocks in places where there was never apartment living and would never be apartment living? The only reason they were being built there was that the owners of them were able to benefit from section 23 relief and to carry that into other properties as well.

Do not forget the hotels.

It was a party for a privileged circle many of whom were close to the Taoiseach's party, and at the end of the day it is the general public and taxpayer who will have to pay for it.

The Taoiseach is not taking responsibility for what has happened. He is not taking responsibility for the consequences and for the people who must bear the pain and whose pockets will be rifled now to pay for what he did over the past number of years. Frankly, I think the Taoiseach owes an apology to the Irish people for the way he has managed the country over the past number of years.

I do not accept the characterisation that Deputy Gilmore puts on matters. I have no intention of giving a history lesson. We are looking here to the present and to the future, and that is certainly what we will be concentrating on in the coming days and weeks.

However, for the purpose of not allowing statements to pass as if they should be passed for fact, the fact of the matter is, first, this economy is far more than simply a property issue. We have a far more deepened, sophisticated and developed economy than was the case five, ten, 15 or 20 years ago, and we do ourselves a disservice by suggesting otherwise.

Taking the point, that certainly it was true that up to 12% of output was coming from the construction and the construction-related sector, it related also to increased public investment.

On private sector interests or people who built houses, the vagaries of the market will determine how they get on. The Government did introduce Part V. Section 23 relief was not available in every part of the country. It was available in certain parts of the country since the early 1980s and we have seen major renewal in our towns and cities as a result. There is now far more activity and they have been brought to life after the prolonged recession of the 1980s. Those were the right policy decisions at the time and we have seen the benefits that resulted in terms of increased receipts, increased employment and increased investment. There is no doubt about that.

My point, however, is that, as Minister for Finance, I terminated those property reliefs on a planned basis to ensure we could move on to other areas of investment, be they research and development, technology, science or innovation, and serious amounts of taxpayers' money, generated from that increased level of activity, are now being provided in those new areas. That is a far fairer perspective on the change in policy formulation there has been in this country to meet the new demands and requirements of the time and of the modern society and economy we have built. That is the situation.

To come back to the specific point raised, I am glad that people are being housed and that so many houses were built not only in the private sector, but also through the public programme. I am also glad that we are bringing forward new, innovative ways to provide for those who depend on public housing through social and affordable housing initiatives from the voluntary sector, the Affordable Homes Partnership and local authorities. I welcome all that development. I congratulate my colleague, Deputy Noel Dempsey, who, as Minister for the Environment, Heritage and Local Government, introduced the Part V provision to ensure the public good was addressed in the context of development land prices. That is what happened.

What is relevant for the people listening to this debate is the question the Deputy asked today and to which I wish to reply. Yes, there will be challenges facing us in the months and years ahead and there will be a requirement for everybody in the system to pay more than was the case previously. That is true. However, in relative terms after this budget and the next couple of budgets, as we face into this situation in the next year or two, we will ensure that we are still in a far better position than we were five or ten years ago. The relative position, therefore, having increased the level of economic activity from one point to another, and even if it does not proceed in an incremental positive line now and even flatlines, is that we are still in a far better position now or in the year ahead than we were five or ten years ago when 600,000 fewer houses were built and 1 million fewer people were working in our country.

Does the Taoiseach believe that?

We are facing into this coming year with increased unemployment, which I do not welcome.

What about young people having their homes repossessed?

We must see what we can do to deal with that, and the Minister for Finance will outline in the budget certain efforts to improve the business climate as well. All of that is true. We will be in a more difficult position next year than this year.

There is worse to come.

The trouble is that the Government has no plan.

However, I firmly believe there is still evidence to show that we will be in a far better position next year and the year after than was the case even in the recent past. The growth achieved has yielded solid achievements; they are evident. We will face greater challenges——

The public will be punished for the actions of the Government.

——but let us be fair. It is not a case of this economy suddenly becoming a bad economy. It is facing difficulties and there are reasons for that. I accept that some of them are domestic but others are international, from which we cannot be immune. Ultimately, however, we can still get back to growth in the economy and build on those achievements on the basis of trying to provide as fair a budgetary policy as possible, which will be outlined by the Minister for Finance, as we begin that journey. It will not be resolved today but we will begin that journey and find a pathway back to economic recovery on the basis of solid achievements which have not evaporated, despite the rhetoric of the Opposition.